News Release:3878-95


For Release: November 8, 1995

CFTC ANNOUNCES ROUNDTABLE DISCUSSION ON THE PROHIBITION OF AGRICULTURAL TRADE OPTIONS

Washington, D.C. -- The Commodity Futures Trading Commission (Commission) announced today that it will conduct a public meeting on Tuesday, December 19, 1995 from 2:00 to 5:00 p.m. to discuss the current prohibition on the offer or sale of "trade options" on certain agricultural commodities. The meeting will be held in the Commission's hearing room located at Room 1000, Lobby Level, Three Lafayette Centre, 1155 21st Street, N.W., Washington, D.C.

"Trade options" are commodity options which are offered to a producer, processor, or commercial user of, or a merchant handling, the commodity which is the subject of the commodity option transaction and that are entered into solely for purposes related to its business. Trade options may be offered off-exchange, and, under Commission Rule 32.4, are otherwise exempt from Commission regulation (other than rules forbidding unlawful representations and fraud). However, this exemption for trade options does not apply to options on certain domestic agricultural commodities including, among others, wheat, cotton, rice, corn, oats, soybeans and soybean derivatives, livestock and frozen concentrated orange juice. Trade options on these domestic agricultural commodities are prohibited.

This roundtable discussion is intended to bring together a diverse group of commodity option and agricultural experts, regulators, academics and market users to exchange views regarding the prohibition of agricultural trade options. In particular, the Commission is interested in discussion of:

• the purposes served by, and benefits of, continuing the prohibition on agricultural trade options;
• the costs entailed by continuing the prohibition;
• the purposes of, and possible benefits to be derived from, lifting the prohibition;
• the costs entailed in lifting the prohibition;
• the possible uses of trade options in the enumerated agricultural commodities, if permitted;
• the possible problems of permitting the offer and sale of such instruments; and
• the possible impact of lifting the prohibition on price discovery and producers' cash prices.

All individuals or organizations wishing to participate as discussants are invited to submit a concise statement of interest and qualifications to the Commission. The Commission will select a cross section of those interested in participating. In addition, the Commission welcomes written submissions addressing these issues for inclusion in the Commission's official record whether or not the submitter participates as a discussant in the roundtable. Written submissions received by December 13, 1995 will be made available at the time of the meeting.

The meeting will be open to the public. For further information, contact the Commission's Office of Public Affairs at (202) 418-5080.

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